DRAFTING A) LEAVE AND LICENSE AGREEMENTS B) LEASE DEEDS AND C)TENANCY AGREEMENTS

Transcription

1 DRAFTING A) LEAVE AND LICENSE AGREEMENTS B) LEASE DEEDS AND C)TENANCY AGREEMENTS

2 WHAT IS DRAFTING The practice, technique or skill involved in preparing legal documents such as statutes, rules, regulations, contracts, and wills that set forth the rights, duties, liabilities, and entitlements of persons and legal entities.

3 IMPORTANCE OF DRAFTING TITLE DOCUMENT Drafting PROOF OF OWNERSHIP EMBODY THE PARTIES RIGHTS REFLECTS INTENTION OF PARTIES

4 POINTS TO AVOID WHILE DRAFTING ANY DOCUMENT REPETITION ARCHAIC WORDS WORDS WHICH HAVE NO MEANING SUPERFLUOUS PHRASES

5 ESSENTIALS OF GOOD DRAFTING KEEP IT SIMPLE MAINTAIN CONSISTENCY REFLECT ACCURATE UNDERSTANING AND INTENTION OF PARTIES ENCUMBRANCES ETC

6 WHAT IS A LICENSE? License is defined under Section 52 of Indian Easement Act 1882 as, one person grants permission / right to another, in or upon the immovable property of the grantor, something which would, in the absence of such right/permission, be unlawful. It creates no duties and obligations upon the person granting the license and is therefore revocable at will

7 FUNDAMENTAL FEATURES OF LICENSE It is a personal, permissive, non-transferable and unassignable contractual right to use an immovable property for a pre-defined time period, for a certain agreed purpose. It cannot be transferred, assigned or inherited. It does not confer any interest in the property itself.

8 ESSENTIAL ELEMENTS FOR DRAFTING A LEAVE AND LICENSE AGREEMENT Duration / Term; Lock-in Period; License Fee and other charges; Goods and Service Tax/ TDS on License Fee and Outgoings; Security Deposit; Adjustment and Forfeiture of Security Deposit; Possession and Keys of the Licensed Premises; Implication of Renewal and Extension clause

9 STAMP DUTY AND REGISTRATION W.e.f. 1 st May 2013, the Stamp Duty on a Leave and License Agreement not exceeding 60 months is computed as under: Monthly License Fee (including escalation) x No. of Months = A Advance Non-refundable Deposit = B 10% of Refundable Deposit = C Stamp Duty = 0.25% x (A+B+C) A Leave and License Agreement has to be compulsorily registered under Section 55 of Maharashtra Rent Control Act, 1999, the consequences of non-registration is that the contention of Licensee / Tenant as to terms and conditions shall prevail. The liability of getting the agreement registered is on the Licensor.

10 WHAT IS A LEASE Under section 105 of the Transfer of Property Act,1882, a Lease is the transfer of a property, with the right to the Lessee, to enjoy the property For a Fixed period of time On payment of Rent

11 FUNDAMENTAL FEATURES OF A LEASE Lease is a transfer of interest in an immovable property for a pre-defined time period or in perpetuity, in consideration of the lease rent to be rendered periodically or as may be agreed between the parties. It cannot be revoked at will while it is in existence unless otherwise provided in the Lease Deed i.e. termination rights, consequences, etc. Creates interest in the property in favour of the Lessee

12 LEASE DEED ESSENTIAL ELEMENTS: Parties; Subject matter; Rent / Premium ; Period and commencement IMPORTANT DETAILS Covenants Possession Option to Renew Registration

13 STAMP DUTY AND REGISTRATION Section 107 of the Transfer of Property Act,1882 and Section 17(1) of the Registration Act,1908 states that an Agreement of Lease (with possession) or a lease of immoveable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument. Stamp Duty for a Lease Deed is to be paid under Article 36 of the Bombay Stamp Act.

14 WHAT IS A TENANCY Any person liable to pay rent is a Tenant under the Maharashtra Rent Control Act, Tenancy is a broader term in comparison to lease. Deemed Tenancy means tenancy which is implied. Tenancy is usually month by month and there may not be any documentation executed by the parties for the same

15 Tenancy Agreement ESSENTIAL ELEMENTS: IMPORTANT DETAILS Parties; Subject matter; Rent/Charges; Period and commencement Termination Covenants Possession Registration- Landlord responsibility Sub- Tenancy permitted or not

16 STAMP DUTY AND REGISTRATION Section 55 of the Maharashtra Rent Control Act stipulates that Tenancy agreements are to be compulsorily registered Stamp Duty for a Deed of Tenancy is to be paid under Article 36 of the Bombay Stamp Act.

17 DISTINCTION HEAD LICENSE LEASE TENANCY Ownership and Possession Interest in Property Sub-letting and Assignment Both remain with Licensor Personal right to occupy for the license period Not permitted (except if given to hotels, theatres, etc.) Possession passes to the Lessee Creation of interest for the lease period Permitted (if provided in lease) Tenant is in possession Tenant has interest on payment of Rent Permitted with landlord permission

18 DISTINCTION HEAD LICENSE LEASE TENANCY Revocation Revocable at will Not revocable at will Not revocable at will Eviction Easier and speedy as compared to lease Tedious, lengthy and inexpedient Tedious, lengthy and inexpedient Dispute Resolution Small Causes Court and Competent Authority Small Causes Court Small Causes Court Inheritance Rights Not inheritable Inheritable Inheritable

19 THANK YOU